This doesn't look good

Perhaps a little disappointment that the Fed didn't announce QE 3 intensions?

A bad negative divergence on the 1 min, confirmed by the 5 min below. Look for downside into the close, maybe into tomorrow's open as well.

I'm liking USO's action today

I think USO has a good chance of moving up from here. The downside target has been met, there are positive divergences on multiple timeframes and a reversal candle on the daily chart. Take a look and see what you think.

UUP Trade Idea (long)

This is a trade with minimal risk and shows an edge.

Here's UUP at support, chances are good that it will briefly penetrate support and create a false breakdown. However, potential stops are very close so the risk is not so great.

Every chart below: 5,10,15,30 and 60 min all show positive divergences and a range that UUP seems to be accumulated at.

Here's that range I mentioned

This is a trade I see an edge in, I also see minimal risk. If we get a downside break, we can check it for a false break down. Otherwise, this is a trade I would consider right now.

Interesting market breadth fact

Out of 7722 stocks in my scan, only 211 stocks are trading up today more then 2%; that's less then 1% of the market!

Market Update and the Anatomy of a Downtrend

The current daily chart of the SPY-As I mentioned earlier, the Specialists will open the stocks at what they believe to be the low of the day, they buy them there, ride them up and then sell into the rally, making up for the loss on an inventory gap like this one. There's a chance of an oversold condition today with volume rising, so we could see an oversold bounce so long as world events don't trigger another panic sell-off.

Here's the Q's during the 2000 tech melt down. In red, a nasty break down, but note the recovery. This is why tops are so volatile. The downtrend after that had it's bounces, but it was much less volatile. This is why I say the first 10% or so of the move down from the top is the most dangerous-I'd rather catch the meat of the trend in the middle which has much less risk. This is also why I do not advise going in all short right now and maintaining cash for opportunities on the long and short side. This will be a very different decline then what we have seen before so it's best to be a little cautious, there's plenty of opportunity to make money in a bear market.

Here's the DIA 1 min chart-note the accumulation right on the open as I suggested the Specialist would so, and they are selling into higher prices, maybe opening shorts as well. They don't establish a position at 1 level, but rather build a position and end up with an average price.

The DIA 5 min showing the accumulation on the open so it was pretty heavy to show up that fast.

The 10 min chart confirms the opening accumulation and the ongoing distribution and short selling by the locals.

Here we see much the same in the IWM 1 min chart.

The 5 min chart shows some extreme distribution into higher prices.

And it's filtering into the 10-min chart now as well

The same thing on the Q's 1 min chart

And the same on the 5 min chart.

Again, the same on the 10 min chart so we are getting pretty good confirmation of what the locals are up to.

The SPY 1 min chart still looking strong.

However the more influential 5 min chart that shows us what the locals are doing behind the scenes shows distribution/short selling.

And the SPY 15 min chart is showing the same.

So we may very well get some more upside tomorrow on a 1-day oversold condition as I'm guessing the dominant Price -Volume relationship will come in at price down, volume up after the close. However, Fear is very strong and anymore bad news could render the idea of overbought/oversold completely void in a market in which events occur that can't be discounted, this would mean something very bad would have to happen.

While the averages act the way I showed in the first two charts on a decline, individual stocks can and do decline regardless of market volatility, this is why we look for the highest probability trades and use strict risk management and wait for the trend to be confirmed before backing up the truck to load up on positions. Right now, preserving capital and entering sound trades is your best course of action. Swinging for the fences at market tops is very dangerous, especially when we consider this market is now unlike any we have ever seen with the Fed's POMO program creating massive long margin and the HFT firms totally destroying the liquidity providers that have been there to help keep a downtrend orderly. The SEC saw this coming last year and instituted the circuit breaker standards. However, if circuit breakers are tripping nearly everyday, this will only cause the market to sell off worse.

One last thing to consider-keep your eye on the trend, not the daily gyrations. Typically in a bear market decline you have more or about as many up days as down days, it's just the down days move down a lot more and the up days don't move up as much. It remains to be seen if that traditional bear market action will continue in light of the structural damage done to our markets by the Fed's constant pumping of the market which has caused traders to ignore risk and go long on excessive margin, buying every dip. Also the SEC has done nothing about the HFT and other exotic trading firms that have removed liquidity from our markets. Japan's market today was a preview of some of what we can expect when fear completely overtakes greed and there is no bid to support a falling market. This is why I say, it is those who adjust quickly to the new market, the early birds that will not only get the worm, but may be the only ones to survive the new market dynamics.

BAC Follow up

Link 1

Link 2

Well with all the news, BAC seemed to get lost in the mix yesterday-see links above for BAC's bad news.

Now, add to that, THIS...

Daily of BAC break

the 1 min chart looks as if BAC is just following the market

However, the 5 minute chart shows a negative divergence worse then anything in the averages.

Report from Japan

My best friend's brother lives in Japan, apparently nearly every embassy there are telling their citizens to evacuate Japan. Our friend is at the airport where you have to step over people sleeping on the ground. On their way there, they found 1 gas station with gas. They waited 2 hours to get 2 gallons of gas for $10 as they are rationing gasoline. Imagine that-2 gallons!

Thankfully they are returning back to the states.  What of those who have nowhere else to go? The 4 islands of Japan are sure to be covered in radio active particles. Even the US Navy has moved their ships further out to sea after finding radio active particles on the flight deck.

UBS-More then 1 problem -Trade Idea (short)

First of all, UBS is a Euro zone bank-problem #1, second they are being investigated by the US and Japan for manipulating LIBOR rates.

This is a possible trade opportunity with a pretty good looking possible set up, low risk and high probability.

This appears to be a major top playing out, whether a less likely H&S top or a more likely broadening top, either way, it's just a matter of time.

3C daily chart showing the top hit distribution and the subsequent reversal.

Let the trade come to you, the less risk, the better. If I could get shares in the $18.40 area, I'd seriously consider this one for a short sale. You can also phase into the trade adding on strength, I prefer to see if it comes to us though.

Understanding The Situation at Fukushima

The situation is getting worse by the minute and it seems likely we will see at least one total meltdown. Tokyo, a major financial hub, is quickly turning into a ghost town. Major banks are evacuating employees. Radiation is already beyond acceptable limits in Tokyo. Imagine the consequences of a total melt down-Tokyo will be a literal ghost city and the world economy will have one more leg removed.

Here's a video explaining the situation

Remember, Fear prevails and it is not your friend in trading. This is a time to make money, keep your head, don't over react and let the trade come to you.

GE follow up

Yesterday I highlighted GE-if you took the trade, you made money today, but the long term impact to GE's business model may be severely impaired. The reactors in Japan are 40 some odd years old and many of the US reactors are just as old. There has been a move to extend their useful lifetimes that has generated controversy. I wonder how this impacts GE in the long run?

If you are looking at the longer term, today may be an opportunity to add or initiate a position short in GE, resistance is just overhead.

Here's a 9-day chart of GE, this is a secular downtrend.

EEE

Well, I got enough emails on EEE that I'll just post. Many are wondering if they should add here, I think it's risky, but if you use strict risk management and have a tight stop on the second position, you may be able to get away with it with little risk, at least to the second position. First though, make sure your risk management on the first position is airtight.

EEE does have some daily support in the area coming from 2 sources.

The 1 min chart DID NOT confirm the move down which is bullish.

Nor did the 5 min chart and we have leading positive divergences.

Same with the 10 minute, it's too early to go any further then the 10 minute, but the longer charts are positive from before today. You may want to wait for a move back above that trend line. Personally I prefer to add only when a position is working for me.

As for TSO, it needs to show strength today and close back above $25.83-ish. Otherwise, I'd probably reduce my exposure to the position if not close it entirely. The market is likely going to be very volatile, we may even see a 1-day oversold condition today that could provide a bounce tomorrow. Look at the 2007/2008 top declines and you'll see the first major break doesn't usually lead to a big mov down, there's bounces and such, that's why tops are so difficult. That' not to say that we haven't already seen that behavior. Fundamentals are now solidly in control of the markets which means that FEAR prevails and if you look at any bull market vs a bear market, you'll see that bear markets fall faster and harder in less time, thus FEAR is the strongest and most irrational emotion in the market, again, making tops exceptionally volatile.

Market Update

Here are the 1 min divergences I mentioned earlier in the last market update.

DIA 1 min.

IWM 1 min.

QQQQ 1 min.

SPY 1 min.

I'm watching both TSO and EEE, if you are in the trades, feel free to email me.

TSO has recovered pretty well this morning and EEE is still showing a pretty big accumulation cycle, I don't think all is lost yet on either trade.

SLV/GLD

Last night this area was very suspicious when I looked at the chart.

Here's the daily SLV chart in a negative divergence

 1 min chart is in line right now, but GLD's is starting to fall apart, SLV will probably follow shortly 

Here's the area that was suspicious and there's a 15 min negative divergence, the timeframe that usually confirms reversals

GLD, with 2 areas of suspicion.

You can see negative divergences at both on the hourly chart. The 15 min has also turned down.

Here's the 1 min GLD chart.

In my opinion, the intermediate trend for both will be down. There will be bumps and bounces along the way, but the most likely outcome is for the reversal to carry each down further.

The dynamics of gold and silver while seemingly similar, couldn't be more different. The main issue behind gold is Chinese accumulation to possibly start a gold backed currency standard. The dynamics of silver are JPM/HSBC's massive short positions against silver. So target wise, I don't know, we will just have to follow the cycle and look for accumulation to signal what the next move will be.

USO update

Well we had a target for USO on the downside, the idea for newer members was that we expected this, many members went short USO, BUT this was only a short term down side target, after that we expect USO to make at least a new leg higher and possibly a new recovery high. Yesterday I pointed out the accumulation starting and it was strong. This is the accumulation/ distribution cycle or vice versa in this case. We see the distribution for th downside price action and then accumulation starts on the 1, 5, 10 min charts, a reversal usually takes place by the time it hits the 15 min chart.

No matter how USO reached the target, it reached it, GOAL ACHIEVED!

And now the 5 min accumulation is getting stronger. We may have hit bottom in USO today or we are very close to it.

USO Target in white hit intraday today.

Yesterday the 1 min chart was unusually strong, today it has spread to the 5 min chart. We'll keep an eye on the 10 and 15 minute chart, but you may want to start to nibble on some shares long, but don't swing for the fences just yet.

Market update

Since capturing, uploading and posting the last update minutes ago, we are already seeing some negative divergences starting to take shape. They may be a blip or something else, but you should know about them.

Market Update

As I said in my last post....


"Earlier before the market opened, the NYSE invoked rule 48. That's the difference between the NASDAQ and the NYSE.  Supply/Demand and orders set the opening price on the NASDAQ, Specialists set the opening price, sometimes arbitrarily, on the NYSE. Rule 48 says that the specialists DO NOT NEED TO PROVIDE OPENING INDICATIONS and this is one reason many professional traders WILL NOT trade NYSE stocks. Usually, the Specialists will open the market at what they believe will be the market's morning lows, thus we usually see a bounce off the open, that's happening now."




Note the the DIA, IWM, QQQQ, SPY (all NYSE as well, but this is market wide) all opened on their lows with a negative divergence, that's specialists riding the gap up. It's likely when the gap is partially filled they will go short, there has been massive technical damage to the markets this morning. As I've been saying the last few weeks, "use strength to get into the shorts you like or the inverse ETFS".